Belarus may be unable to refinance her public debt timely in 2017
In 2017, Belarus is due to reimburse USD 3.5 billion for public debt, of which only USD 1.3 billion was projected in the state budget. In 2016, Belarus fulfilled her obligations vis-a-vis creditors by reducing social transfers to the population. In the view of a possible shortage of funds in 2017, the best option for Belarus would be to sign a loan agreement with the IMF, which, however, would prompt the authorities to economic reforms.
According to the Finance Ministry, in 2017 in order to service and reimburse her public debt, Belarus would require USD 3.5 billion, of which USD 3.4 billion in foreign currency. The authorities have allocated USD 1.3 billion in the state budget to cover due public debt. These funds will be raised from export duties on oil and petrochemicals, potash fertilizers, as well as due to the surplus of funds from the agreement on the redistribution of import duty within the EEU. In addition, the authorities aim to raise USD 360 million on the domestic market. The remaining funds, required to service the public debt, would be raised from international creditors.
In 2016, Belarus fulfilled all her internal and external commitments, totalling circa USD 3.3 billion. The Finance Ministry raised USD 1.9 billion from external government loans, including USD 800 million from the EEU Anti-Crisis Fund. When housing and utility rates went up in Belarus, the population was forced to become a net currency seller. In addition, the authorities raised USD 1.6 billion on the domestic market through placing government bonds with different maturities. Thanks to substantial currency inflow, the government managed to increase Belarus’ gold reserves by USD 750 million in 2016.
In 2017, the situation with funding sources to refinance public debt is not in Belarus’ favour. Credit tranches from the EEU have been suspended and there are no guarantees they will be resumed. The population has switched on saving behaviour, which implies reduced net currency sales on the domestic market. Revenues from export duties on oil and petrochemicals could reduce regardless of potentially higher oil price as compared with that projected in the state budget for 2017. In addition, the authorities have already revised the Eurobond issue plan upwards from USD 800 to USD 1 billion. In the given circumstances, the government is likely to increase foreign currency loans on the domestic market and to try to speed up the settlement of the oil and gas dispute with Russia. The best option for Belarus would be to sign a new loan programme with the IMF, which would boost sales of Belarusian bonds on foreign markets and reduce their costs. However, it remains to be seen whether the Belarusian authorities would be ready for economic reforms proposed by the IMF.
Overall, in 2016, Belarus managed to reimburse her public debt thanks to reductions in social transfers to the population and international loans. In 2017, amid a potential shortage of available sources to refinance public debt, Belarus will need to find additional funds. Should the Belarusian authorities be willing to carry out economic reforms, the best solution would be to sign a new loan programme with the IMF.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.